Home "flippers" were following American Dream

[TexasLawyer]

Home "flippers" were following American Dream
Mon Oct 1, 2007 3:11pm EDT

NEW YORK (Reuters) - Sherrill Zenie said all she wanted was a piece of the American Dream, but what she got was "a kick in the rear." Zenie is one of a legion of a relatively new type of homeowner, a "flipper," who sought fast money by rapidly buying and selling homes to capture a profit on each as prices soared.

Speculators who bought multiple homes like Zenie were once a boon to the U.S. economy when they pushed home prices to record levels over a five-year period. Now their unsold homes are the bane of a sickly housing market.

Many are stuck with unoccupied properties they cannot sell and mortgages that are bigger than the appraised value of the home, a situation known as being "upside down." The glut of unsold homes comes as lenders are making it harder for borrowers to get loans, causing defaults to escalate and home prices to decline further.

"Investors that initially purchased a property with no money down or a very low down payment could now find themselves upside down, and without prospects of selling the property soon may opt to just walk away," says Greg McBride, senior financial analyst, Bankrate Inc in North Palm Beach, Florida.

<snip>

http://www.reuters.com/article/wtMostRead/idUSN1035099520071001

[nashville_brook]

1. correction: Zenie is one of a legion of *now extinct investors*, the "flipper"

[TwilightGardener]

2. Does the American Dream mean individual home ownership, or sheer greed?

According to this lady, it's greed. Glad she got a swift kick in the ass.

[LisaM]

3. No - the American dream is to be able to own your own house

Not to speculate on the housing market. I'm sorry, but I just can't buy that. Buying a fixer-upper, making good improvements, and selling it for a reasonable profit - fine. Pure speculation, trying to get rich quick - not fine. People like that have driven housing prices in my market (Seattle) so high I will likely never own a house. This woman in Nevada owns FOUR?

My own neighborhood has been a victim of this type of buyer, and prices have doubled in about five years - they weren't even affordable to begin with (I rent, and the place is a tear-down).

[Matariki]

30. I'm in Seattle too. Frustrating isn't it?

[LisaM]

35. Yep!

When I moved here and houses were (somewhat) affordable, I worked in a daycare and made zero money. As I transitioned to a better-paying job, houses shot up to the level where you really need to 1) get a windfall down payment from somewhere or someone to get into the housing market; and 2) make at $100K per household to make the mortgage payments. With one exception, most of the people I know who own houses got down payments from their parents or, in a couple of cases, from Microsoft stock.

[FormerDittoHead]

4. Capitalism in the USA - making money without actually making anything...

Buy a house, splash a coat of designer paint on the kitchen walls, buy a couple of shrubs, and expect to make a $40,000 profit in a week... Yeah, that's an economic plan that sustainable...

The problem is that it's like a game of musical chairs - and CNBC / Wall St. Journal, etc are all telling us that if we believe, and dream big, WE can be the one left sitting pretty. Let's not talk about the majority of LOSERS.

[midlife_mo_Jo]

10. That's a pretty good definition these days. :)

[depakid]

5. The American Dream. LOL. Like the one that led to the Panic of 1837

The root causes of which ain't all that much different than what going on now.

[cutlassmama]

6. There are always risks in flipping a house. Sometimes you win

Sometimes you lose. She lost. That's the risk.

[SoCalDem]

15. Bargain "fixer-uppers" USED to be what the first time buyer

got into.. THEY fixed it up as they lived in it, and when their family outgrew it, and after they had equity and it all fixed up, they then sold it to make a little money to put down on the next house..usually newer, bigger and in better shape..

A speculator is a speculator is a speculator, and sometimes they lose..

The family home, being restored by a family living in it allows for gradual, sensible appreciation..

[Quantess]

32. So true!

Don't people know that house flipping has always been a gamble?
It's pretty naive to think "it's so easy"

I loved the reality show Flip This House. Talk about a stressful way to make a living!

[KT2000]

7. Boo Hoo

These people are at least partially responsible for driving the cost of a home so high that working families could no longer afford to buy a home.
They helped to make home ownership a speculator's market. No or low money down? That should have been a clue.

[dbackjon]

8. I am happy when flippers lose money

Their greed has made decent housing unaffordable for millions of hard-working Americans.


There is no defense for their greed.

[midlife_mo_Jo]

9. There's really not enough of them to affect the market that much

[TexasLawyer]

18. Some market areas heavily affected by flippers

Most US realty markets were not overly affected by flippers, but some especially sun-belt markets are big exceptions.

Flippers Fuel Foreclosures

By Les ChristieRISMEDIA, September 6, 2007-(CNNMoney.com)–

<snip>

“Defaults are on the rise in most parts of the country, but…it is not always the case of a homeowner losing his or her home,” Doug Duncan, the MBA’s chief economist, said in a statement, “but often the case of an investor gambling on a continued increase in home values and losing that gamble.”

Several sun-belt states were magnets for real estate speculators during the home-price boom. Coastal California led the early charge, but as prices there raced ahead of affordability, many investors abandoned those markets for Central Valley cities as well as Las Vegas, Phoenix and other Arizona towns.

Florida drew droves of investors from the Northeast, who spurred a rash of condo development in Miami, Ft. Lauderdale and other coastal towns. Single family home prices were also driven up in towns all over the Sunshine State. As of June 30, in Nevada, 32 percent of all prime mortgages in default and 24 percent of subprime defaults were on non-owner occupied properties, according to the MBA. The numbers for Arizona were 26 percent prime and 18 percent subprime. In California, they were 21 percent and 15 percent respectively.

The default rates in Florida for non-owner occupied homes were 25 percent for prime loans and 14 percent for subprime ones. In the rest of the nation, non-owners accounted for just 13 percent of prime loan defaults and 11 percent of subprime.

<snip>

http://rismedia.com/wp/2007-09-05/flippers-fuel-foreclosures/

[dbackjon]

20. I take it you don't live in Phoenix....

[mvccd1000]

34. You're not kidding! I've lost about $40k in potential equity in the last year.

Of course, it's still worth twice what I paid for it when I had it built in 2000, so I'm not complaining. I'm scrambling to pay down as much of my mortgage as I can so I can try to pick up one of these repos that all of the investors are having to let go.

People are still coming to the valley, and they're still going to need houses.

[tanyev]

11. I thought the American Dream was to work hard and get paid a decent wage.

Shows my age, I guess.

[Greyhound]

12. The "American Dream" was a dream of liberty. It had nothing to do with

owning anything. It was about the freedom to live as you wish, to associate with whom you wish, to say what you think, and to go where you will.

That lasted about 30 years.

[spanone]

13. she wanted the 'get rich quick' american dream....some win, most lose

[DS1]

14. fuck em

fast-buck schemes aren't part of it

[Catchawave]

16. "Flip this house" on one of the cable channels

showed how "cheaply" you can make cosmetic repairs to enhance your profits. I could never watch that show because I found it a depressing subject.

"Slumlords" are another category of greed I can't stand, I hope they go belly up too.

[CountAllVotes]

17. I know of people in Canada that were/are doing the same

I do not know how they fared on the flipping of properties in Canada.

The lesson should now be learned.

It tends to not work very well unless you happen to be extremely wealthy and can afford such endeavors.

[cobalt1999]

19. That's not the dream I was following all my life.

Have I been following the wrong dream all this time?

Here I was working, paying off my own home, setting aside some money for the kids college funds, and trying to save for retirement too. Little did I know that "home flipping" and "money for nothing" was what I should have been striving for.

[blondeatlast]

21. My heart bleeds...

for homeless Americans with no shelter from the cold or heat. As for Ms. Zenie--karma's a bitch.

And I don't care...

[Snarkoleptic]

22. There's a lot of mortgage fraud being taught out there.

Mortgage fraud is the new game for those who can no longer make a game of flipping.
They're now teaching others how it's done.
Many of the schemes involve such things as occupancy fraud, straw buyers, ID theft, chunking, false income documentation, collusion with shady appraisers, and phony downpayment schemes.
The man is wise...you are still an outlaw in his eyes. - Walter Becker
www.mortgagefraudblog.com

[BlooInBloo]

23. Some gamblers win, some gamblers lose.

[ReadTomPaine]

24. They weren't "following" the American Dream.. they were stalking it. n/t

[mtnester]

25. MMII = 2002

Silly kids...that is always at the bottom of the screen at the end of most of those shows..too bad roman numerals are not taught as much in school nowadays. Maybe some more folks would have figured out that those folks making amazing money as from oh a couple YEARS ago...just sayin

[PDenton]

26. No

as Howard Knustler would say, they are part of a group of Americans who wanted instant wealth- fast money with little or no effort.

NO SYMPATHY for home flippers. These capitalist pirates are the same kind of people that go around and lie, cheat and steal their way to the top... all in the name of greed.

It is because of home flippers that, in the past 7 years, the middle class have been priced out of the American Dream.

[Raine]

27. My parents started out years ago doing that

back in the 1950's &60's but they didn't call it "flipping" then. It was just called buying a "fixer-upper". My parents would buy a house that was in a mess and we would move in and live there while they fixed it up. We lived in some real weird messed up houses when I was a kid. After they fixed it up they sold it and would buy another and repeat the whole thing. My parent's goal was to keep getting a better house till they got one that they really wanted in a nice area. After they got the house they wanted we stayed there and he quit "flipping" my father still owns that house.

[sendero]

28. There's a huge difference..

... between that and the current crop of flippers. The most important one being that back then you had to have cash or pay a significant down payment to buy that house. So if you did fail, you did not tax the entire system.

Like most of the folks in this thread, I have ZERO sympathy for the OP's poster child. None. Indeed, negative sympathy.

[Matariki]

29. Good. Jerks like this have ruined the "American Dream" of home ownership for the rest of us.

[WinkyDink]

31. Feom the TV shows, flippers seem like they're out for a fast buck.

You pays yer money, and you takes yer cherce.

[mitchum]

33. Cry me a flipping river, Sherrill